Calculate the R&D tax credit: from cost to credit

The R&D tax credit is the assessment basis times the funding rate: 25%, or 35% for SMEs. For contracts placed after 27 March 2024, the 70% eligible share equals 17.5% or 24.5% of the contract fee before the additional flat rate.

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  • Personnel + own contributions + 70 % contract research
  • From 2026: 20 % flat rate on top
  • Rate 25 %, SMEs 35 %, cap EUR 12 million

Written by Max Nodes, Founder and Managing Director · 25 of 25 supported BSFZ applications certified (as of 09/2026) · Last updated: · Law as of:

At a glance

From costs to the assessment base

From costs to the assessment base — Allocate cost categories correctlyCost base€
Allocate cost categories correctly
Figures and details
From cost to credit, row by row
R&D personnel costs(employer gross)EUR 640,000Own contributions (§ 3 (3))EUR 100,000Contract research, 70 %EUR 210,000Overhead flat rate 20 %EUR 190,000Assessment basisEUR 1,140,000Funding rate 35 %EUR 399,000

Example: EUR 640,000 in personnel costs, 1,000 own-contribution hours and EUR 300,000 in contract research, SME, project from 2026. Each row shows one step of the formula above: personnel costs, own contributions, contract research, flat rate, assessment base, funding rate.

Key facts in brief

The R&D tax credit is calculated in three steps: assessment base, cap, funding rate. It sums personnel costs (Section 3(1)), own contributions (EUR 100 per hour, Section 3(3)) and 70 % of contract research (Section 3(4)). From 31 December 2025, a 20 % flat rate is added (Section 3(3b)). Cap: EUR 12 million per year, rate 25 %, for SMEs 35 %.

The essentials of the calculation

  • Formula
    Assessment base × funding rate = R&D tax credit
  • Assessment base
    Personnel costs + own contributions + 70 % contract research
  • Cap
    EUR 12 million per fiscal year
  • Funding rate
    25 %, for SMEs 35 %

    • How Does This Work Out in a Concrete Case?

    Two cases using amounts already used elsewhere on this page.

    A 2026 project like the headline example

    EUR 640,000 in personnel costs, 1,000 own-contribution hours and EUR 300,000 in contract research, SME.

    R&D personnel costs (employer gross)EUR 640,000
    Contract research, 70 % of EUR 300,000+ EUR 210,000
    Own contributions (§ 3 (3)) · 1000 h × EUR 100+ EUR 100,000
    Overhead flat rate 20 %+ EUR 190,000
    Eligible expensesEUR 1,140,000
    Funding rate35 %
    Research allowance per yearEUR 399,000

    Contract research without own staff

    A large enterprise commissions a pure research contract worth EUR 500,000 with an external institute.

    R&D personnel costs (employer gross)EUR 0
    Contract research, 70 % of EUR 500,000+ EUR 350,000
    Overhead flat rate 20 %+ EUR 70,000
    Eligible expensesEUR 420,000
    Funding rate25 %
    Research allowance per yearEUR 105,000

    In the second case, only 70% of the contract volume counts toward the assessment base (Section 3(4) FZulG). Anyone who counts the remaining 30% by mistake overstates their credit.

    Which costs count toward the assessment base?

    Four cost types make up the base, each with its own rule.

    Cost types and their eligibility
    Cost typeLegal basisEligibleRule
    Personnel costsSection 3(1) FZulG100 %Gross wages + future provision
    Own contributionsSection 3(3) FZulGEUR 100 per hourSole proprietors only, max 40 h/week
    Movable capital assetsSection 3(3a) FZulGDepreciation onlyDepreciation on assets used
    Contract researchSection 3(4) FZulG70 %60 % before 27 March 2024; EU/EEA only
    Not eligible: administration, rent, sales, marketing; materials don't count separately, see Material costs.

    Which Mistakes Make the Calculation Wrong?

    Five mistakes change the result the most.

    • Gross salary used instead of employer gross: only the wages subject to payroll tax withholding count (Section 3(1) FZulG).
    • Contract research counted at 100% instead of 70%: only 70% of the invoice amount counts (Section 3(4) FZulG).
    • The 20% flat rate applied to an old project: it only applies to projects started after 31 December 2025 (Section 3(3b) FZulG).
    • The per-year cap overlooked: the assessment base is capped at EUR 12 million per fiscal year (Section 3(5) FZulG), not summed across years.
    • Own contributions claimed for a GmbH: Section 3(3) FZulG covers only sole proprietors and co-entrepreneurs, a GmbH managing director counts only via salary.

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    Max Nodes

    Max Nodes

    Founder and Managing Director of NOVARIS Consulting. Specialised in the German R&D tax credit (FZulG) since 2021; 25 of 25 accompanied BSFZ applications approved (as of 09/2026). Max Nodes